Deluxe Corp. ((DLX)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call from Deluxe Corp. reflects a mixed sentiment, revealing both strategic achievements and ongoing challenges. The company celebrated notable successes in EBITDA growth, cost reductions, and effective debt management. However, these positives were somewhat overshadowed by struggles in revenue growth and declines in certain segments, such as Print and B2B Payments.
Strong Comparable Adjusted EBITDA Growth
Deluxe Corp. reported a commendable increase in their full-year comparable adjusted EBITDA, which reached $406 million. This marks a 3.9% improvement from the prior year, accompanied by a 100 basis point enhancement in adjusted EBITDA margins, now at 19.3%.
Progress in North Star Program
The company’s North Star program has made significant strides, particularly in reducing SG&A expenses. Corporate expenses were decreased by more than $26 million, or nearly 14%, in 2024, showcasing effective cost management.
Debt Reduction and Refinancing Success
Deluxe successfully reduced its net debt by more than $52 million and refinanced its 2026 debt maturities under favorable conditions, extending these to 2029. This reflects a strong strategic move in improving the company’s financial health.
Data Segment Growth
The Data segment of Deluxe Corp. showed robust growth, with an impressive 10% increase. This segment also saw a strong margin expansion, ending the year with a margin rate of 25.9%.
Revenue Decline
Despite areas of growth, the company faced a 3.2% decline in total revenue for the year, which was 1.2% on a comparable adjusted basis. This was notably impacted by the late 2023 payroll exit.
Print Segment Decline
Revenue from the Print segment fell by 4.5%, with legacy check revenues decreasing by 2.5% and promotional solutions down by 7%. This segment continues to face challenges amid market shifts.
B2B Payments Segment Challenges
The B2B Payments segment experienced a 3.8% revenue decline for the full year and a 7.9% drop in adjusted EBITDA, highlighting ongoing difficulties in this area.
Forward-Looking Guidance
Looking ahead, Deluxe Corp. has set forward-looking guidance that includes a projected 1% to 2% revenue growth and 2% to 7% adjusted EBITDA growth by 2025. The company expects mid-single-digit growth in Merchant and B2B segments and strong performance from the Data segment. Free cash flow is anticipated to increase by 20% to 40%, targeting $120 million to $140 million for 2025.
In conclusion, while Deluxe Corp. has made significant financial improvements and strategic advancements, challenges remain in certain segments. The company’s proactive cost management and strategic refinancing place it in a strong position to tackle these issues and pursue growth opportunities in the upcoming years.
